Bridging a Breakup: In Divorce, Neutrality Is the Name of the Game

EXECUTIVE SUMMARY * More family law attorneys are recommending their divorce clients hire a single, neutral CPA to help handle the transition from their shared financial life to their new independent lives. Using a neutral CPA often keeps the divorcing parties out of court. * A neutral accountant gathers documents, makes inquiries of both the husband and wife, determines their income and expenses and prepares a schedule of assets and liabilities. Where necessary, the CPA values businesses and other assets. For the arrangement to work, there must be trust between the parties. * The job is easier if the neutral CPA can speak to and meet with clients directly, without either lawyer present. Request that the husband and the wife and their counsel allow this. The CPA's analysis, opinions and related correspondence should always be sent to both parties and their counsel, and both attorneys should have their client's authority to request services. * Dueling accountants usually present two different sets of numbers, creating a range within which the parties are likely to settle. Similarly, the neutral CPA should produce scenarios and ranges rather than a single number. Different sets of facts and assumptions will result in vastly different numbers. * Many CPAs think that offering neutral CPA services to existing clients who decide to divorce poses a conflict of interest. However, it's highly probable that the accountant already represents both parties in his work. It may be the case that the parties are far better served by hiring a practitioner who has worked with them, knows their finances and makes full disclosure to both parties. ********** In a divorce, each side traditionally hires a CPA to determine how to separate the couple's finances. If those accountants don't agree, which is often the case, the likelihood of a trial increases. But with court dockets jammed and expenses sky high, more family law attorneys are suggesting that divorce clients agree to hire one accountant instead--a neutral CPA--to help the parties stay out of court. Judges are leading this action as well; if a case does go to court and the parties haven't engaged their own CPAs and cannot agree on a neutral expert, a judge will appoint one. Here are details about my experience developing this growing litigation support niche. WHAT A NEUTRAL CPA DOES A neutral accountant performs the same duties in a divorce case that two separate CPAs would: gathering documents and making inquiries of the divorcing husband and wife to determine their income and expenses. After a lifestyle analysis, he or she prepares a schedule of assets and liabilities, calculates child support payments as regulated by state guidelines and values businesses and other assets. Based on this forensic work, the neutral CPA recommends to the parties and their attorneys an equitable distribution of assets and liabilities, along with an amount for alimony. Most divorce cases involving an impartial accountant go to mediation, where the neutral CPA assists the mediator by presenting different financial options during the negotiations. If the case ultimately goes to court, he or she may be called as an expert witness. HOW COUPLES BENEFIT By analyzing a divorcing couple's financial situation impartially, the neutral CPA helps * Save the parties money. Engaging two adversarial accountants can double fees and increase hardship, says Thomas F. Burrage, CPA/ABV, CVA, who handles litigation and valuation at Meyners + Co. LLC in Albuquerque, N.M., and chairs the AICPA's Forensic and Litigation Services Committee. A family must pay those experts at a time when resources are stretched thin from the cost of establishing two households and paying attorneys' fees. But when the parties use a neutral CPA, legal and accounting fees are lower because there is no need to file discovery motions and pleadings, attend hearings and depose the CPA. …